There has been some great input here so thanks to all contributors. I'll cover a few of the points in one post.
1) I have a lazy Susan and unfortunately it runs quite a bit too rough and imprecise for my requirements.
2) I need a groove rather than a roller bearing in order to retain tightly one half of the assembly.
3) The insert options are really interesting however taking on board a few of the comments, I do have concerns over chatter. My lathe has reasonable power but would be considered of light construction.
4) I'll have a look at the design and see if a v groove is an option.
5) The 'ball turner' sounds very interesting but a lot of work. Given the tools I already have that could take me weeks.
6) I do have a mill but not a rotary table and I do like the idea of cutting the groove with the OD of an end mill. Also filing and polishing a first cut groove is definitely an option. As an alternative I am thinking about using a lollipop end mill like the link to get a groove from the end mill, then finish on the lathe. Is his a really bad idea?
LINK
7) The application has to run horizontal and is very light loading, say 10kg max. It is for a hobby prototype project and the compact element is key which means using and retaining a standard bearing will not be ideal.